Lone Star Unlikely to Complete KEB Sale by April
By Na Jeong-ju
Staff Reporter
U.S. investment firm Lone Star Funds and HSBC Holdings won't be able to finalize the deal on the sale of Lone Star's 51.02 percent stake in Korea Exchange Bank (KEB) before the April 30 deadline, analysts said Monday.
The two sides signed a $6.3 billion contract on the sale of the country's sixth largest lender last year on condition that the contract will expire if they fail to obtain regulatory approval by the end of April. Both sides can demand renegotiation over the price after April, but the contract will be canceled if either party gives up.
The situation is turning worse for them.
After the Seoul Central District Court handed guilty verdicts on Lone Star on stock rigging charges, Friday, the Financial Supervisory Commission said it will delay making any regulatory decisions on whether to approve the KEB deal until the court makes its final rulings on another case involving the buyout fund.
In addition, the incoming government's plan to push for the sale of state-owned banks, such as Woori Bank, Korea Development Bank and Industrial Bank of Korea, can reduce HSBC's appetite for KEB.
Mirae Asset Securities said Friday's court ruling has raised the possibility that the deal between HSBC and Lone Star will be over.
``Both Lone Star and the prosecution said they will appeal the ruling, so it will take some time until the court makes a final ruling,'' said Lee Chang-wook, an analyst at Mirae Asset. ``In addition, the regulator reaffirmed that it will make a regulatory decision on HSBC's takeover of KEB after the final ruling. This will make it difficult for HSBC and Lone Star to meet the April deadline to complete the deal.''
He also said Kookmin Bank and Hana Financial Group, which had shown interest in buying KEB, may move again to bid for the bank.
``It is unlikely that Lone Star and HSBC will finalize the KEB deal by the end of April,'' said Sung Byung-soo, an analyst at Prudential Investment & Securities. ``It is also uncertain whether HSBC will acquire KEB.''